KUALA LUMPUR – Despite Petronas suffering one of its worst losses ever last year, economists believe the national oil giant’s fundamentals are rock solid, with a rebound expected in the near future.
They said the company’s RM21 billion loss is not extraordinary, but in fact, anticipated, given low world crude oil prices and weak global demand for crude oil and natural gas, especially in the early part of the Covid-19 pandemic.
"Post-pandemic, the oil and gas market is expected to rebound strongly, and that is the time when Petronas’ financial performance will turn back into profitability. Its capacity to generate revenue remains stronger than ever,” independent economist Datuk Zakariah Abdul Rashid told The Vibes.
Petronas registered a net loss of RM21 billion in the year ended December 31, 2020, compared to a net profit of RM40.5 billion in 2019.
Excluding impairment, its profit dropped 78% to RM10.5 billion from the RM48.8 billion recorded in the previous financial year.
President and group chief executive Tengku Muhammad Taufik Tengku Aziz was reported as saying the state-owned firm saw its performance dip substantially in 2020, but it will still deliver an RM18 billion dividend to the government in 2021, up from the RM10 billion it paid last year.
Zakariah said Petronas’ contribution to the Malaysian economy remains intact, as shown by its dividend disbursement of an additional RM10 billion, on top of the RM24 billion initially announced.
“The scale of the economic crisis due to the pandemic is extraordinary and unprecedented, and the federal government deficit is expected to grow to 6% of gross domestic product, but the Petronas dividend has somewhat mitigated the crisis.”
He added that the importance of the firm’s role is clear, as in recent months, it has contributed to the strong growth in commodity exports.
“This has resulted in a stronger trade balance, thus avoiding the possibility of a deficit in our balance of payments.”
An analyst at RHB Research Institute said Petronas will partly drive Malaysia’s post-pandemic economy, and is expected to register a good showing in the 2021-23 period.
“But in the future, it is wiser for Petronas to diversify its earnings by intensifying its activities in renewable energy, such as electric cars or solar power.
“It cannot focus solely on crude oil, and Covid-19 has exposed its overdependence on crude oil. So, Petronas needs to diversify its earnings portfolio.” – The Vibes, February 28, 2021
